Transcription
You laid out some real brutal numbers here. 97% of future traders lose money. Sports betting legalization spikes bankruptcies by 25%. They don't want to trade against each other. They want to trade against you. The user is the product. Zuckerberg's in court. They've gamified social media. They've made it too addictive. I think most people hold this view of the free market. If it's technically allowed, I can do it. The big fight right now is this Clarity Act. It's not like it helps us in any way.
>> Yeah. So, who does it help?
I don't trust my own predictions about AI. So, are you a little bit more on the bearish side? Like maybe it's a big waste of time and not going to be as transformative.
>> I think I hold two competing thoughts in my head.
>> Then what's the biggest misconception about Bitcoin among Bitcoiners?
>> Um, all right, Alex. Um, I want to just jump right in and talk about an article that you recently published that went pretty viral titled, "You were promised a financial revolution, but you got a casino in your pocket." And it seems like it went pretty viral. I mean, you basically called out the entire fintech industry for turning what started as uh democratizing finance, but turned it into a bunch of casinos and people's pockets, Robin Hood, Coinbase, Cash App, etc. So, they they were supposed to be about helping regular people build wealth, but now they're pushing meme coins and leverage and things like that. What was the moment that made you say enough and write this and and send it out?
Yeah, the big change recently was and the final straw for me was these these financial apps, not all of them. Um, there are still plenty of good actors in the industry pushing sports betting. um opening Robin Hood, opening Coinbase, and the first thing you see in an app that has was originally sold to you as a place to build wealth. Um is, hey, bet on March Madness, bet on the Super Bowl. Um and it it made me and and a lot of other people clearly because this article resonated with a lot of people. It it made us go, you know, have have these companies lost the plot? like what's going on here? You know, casinos are are, you know, kind of fine, right? Like Caesar's Palace is is in Vegas and Caesar's Palace has a brand. Hey, come here to have fun. You might lose you some money. You might make some money. It's a good time. It's very straight. It's very honest. They're not sitting there saying, "Hey, you know, come to Caesar's Palace and um we'll be your bank. Um, we'll sell you investments, but then you can also play roulette here." um the these these fintech apps were are selling themselves as places for your wealth and now they're selling you gambling and I just think that's totally immoral. It's it's and it's going to lead so many people to losing their shirt and it's really bad for society. Um, I'm not saying it should be illegal, like I'm not a I'm not like a big like, hey, let's make more laws kind of person, but I think a lot of people are going, "Well, hold on a second. This just seems wrong." And that's basically what I wanted to communicate in this article and get the conversation going.
>> There's a quote that I use all the time and it's um, supposedly Vladimir Lenon told John Maynard Kees that the best way to destroy capitalism was to debauch the currency. And he and he went on to the long quote and he said that um through a series of inflation all relation to money will be lost. And then he ends it by saying that eventually uh the best way to get rich will be through gambling and theft. And so whenever you look at any society which now today there's been many of them over the last couple years that have high high inflation. You see they all turn to some form of gambling. And while you know I I I think you know most of these companies these fintech companies I mean you have a company and you can let me know what you think about this but you're typically trying to build what the customers want and um almost all investing has sort of turned into gambling today right the Warren Buffett value investor has been gone for a long time it is just gambling and then also back to the question what what Vladimir Lennon said I mean is this a f is this just sort of like a what we get at the end of you know high inflationary sort of end of a fiat fiat currency era.
>> Um I I I think there are two truths. Um and one is that one is the more that our currency gets debauched the more it gets debased the the more people feel like they need to speculate and gamble to get ahead. Now I had some criticisms uh from this article. I had some people in the comments going, "Well, it's easy for you to say, but if you're not,
>> yeah,
>> you know, if you're not successful or if you're um, you know, just getting started in life, this is the only way to get ahead now. You got to, you know, put all your put all your chips on red." Um, and and so I I do think there's a reality, there's a social reality that there is no longer this deeply held belief that if I put my head down and work hard, I'll get ahead. um because it's a lot harder than it used to be to get ahead for a variety of reasons and and so that's a reality, right? And and so, you know, you could criticize my criticism of the companies and say, well, the companies are just giving people what they want, right? Um the people are just now incentivized to gamble and hey, let's let's let them. Um, but I think that like there's also a truth which is that even if we had this pristine society with a gold standard and upward mobility for thousands of years, I think humans have learned over and over again like gambling is very addictive. Um, and you have you can say, okay, well, you know, I'm smart, right? I would never actually get addicted to gambling. But the reality is there's always like, you know, um a section of a segment of society that's pretty large that is highly susceptible to drugs and gambling. And so we we developed these social mechanisms to like keep that in check because if you let it go run rampant, it hurts all of us, right? All of our lives are worse. And so, you know, we had all these gambling laws and now like the sort of the dam has broken because prediction markets realized that they could get around all the state gambling laws and sell um I won't get into the details, right? But that's sort of the whole like sort of unlock here. The reason you're seeing this all of a sudden is that the prediction market thing, which previously was just kind of this cool way to bet on elections and uh the weather, um uh realize, hey, we could add sports and just make sports betting everywhere. Um it used to be illegal to offer sports betting if you're a Robin Hood and now it's not. And that's been the change. And so I think there there is something else here beyond just like this the social society is changing. This is what people want. It's like what is the moral um what is the moral obligation of a financial institution right um should and and I sort of like uh gave gave gave sort of what I think the line is um I do not think a financial institution should sell products that they don't want their family to use and I think that's what's happening here I think that's the line that's been crossed um you know just like Facebook just like Mark Zuckerberg probably doesn't is not going to let his daughters have Instagram um uh you know these execs would not want their son uh betting you know sports betting in Robin Hood um but there's they're pushing it on everyone else. So I think there's something there.
>> Yeah. Where would you draw that line of a financial institution?
>> I mean I would draw the line at don't sell financial products you wouldn't want your family to use.
>> No, but what I'm saying is like you're you you said earlier you're not about like a bunch of new laws. So like you think it's fine to have prediction markets. you just don't want financial institutions to embed those financial or those prediction markets inside their apps. I think that's what you were trying to say, right?
>> Yeah, I think that's a big part of it. Um, you know, I, you know, you could argue maybe there are some where it makes sense, but I think by and large it's all just speculative gambling and um, no one really was using it until they added sports, which kind of says it all, right? Um, so yeah, you know, I think like don't add zero sum like these are all inherently zero sum products. There's no wealth building in a prediction market. It's all zero sum. Like there's a winner and there's a loser. Um, it's not like we're investing together in this enterprise that's making computers. Uh, and we can get wealthier together if it's successful. Um, so I I think that's like kind of the line I would draw is like is this some zero sum speculative product or is this like an investment?
>> Yeah. And you know, back to investment, like whatever that word really means, but like typically you would be investing savings, earned capital into a business that's going to use those proceeds for productive capital, produce something of value to society, and everybody benefits from that. Um, it's something I've been very critical about since really, you know, the crypto trading days, uh, from years ago and and and and it's obviously continued. But like all these people, they're making money, but there's no value that's been created from that. And so really, it's extractive. So maybe you've pulled some money out by trading things back and forth, but no value was ever created there. Um, which to the point that you're making is both uh is dangerous for society because number one, it's taken capital that could be used in productive uses and now it's sort of being wasted like eating junk food. Uh, and then it's also dangerous because most people lose. So you laid out some real brutal numbers here. Let me just read a couple of them. 97% of future traders lose money is what you said. You said sports betting legalization spikes bankruptcies by 25%. So those are that's that's a pretty hardcore number. That's a brutal number. 97% of future traders lose money. Yes. And that's speaking to these um you know like Robin Hood started pushing like options trading, Coinbase started pushing futures trading, convincing retail that they should be trading the same sophisticated financial products that Wall Street does. And they brand it as democratization like oh hey, you know, it's not fair that uh only Wall Street can trade this thing but actually what's really happening this is what's also happening with the prediction markets is these markets just aren't very interesting. If it's Jane Street trading against the Citadel, they don't want to trade against each other.
>> They want to trade against you.
>> Yeah.
>> They want to trade against the guy who thinks he, you know, who's learning about this stuff. And that's that that's where the real like and so really the the like the customer of these apps in many ways is not the user. Um the user is the product and the customer are the Wall Street trading firms um that that are you know they're the user is getting being fed to them basically when they're being sold these products.
>> Yeah. Yeah. I remember in 2020 during the pandemic and then everyone got the helicopter helicopter money all the stimulus was sent out and I have daughter my oldest daughter was in high school and a bunch of the boys were like coming over they know I sort of work in the finance niche and they're like ah can you show me how to trade options and they're showing me like their their Robin Hood accounts and stuff and like everybody got so into it you know and I mean it's still it still dominates the questions that I get you know like show me show me what you're trading what are you buying what price levels you know and it's like this this trader economy, but I think it's like more a function back to the original opening quote which is like a function of a high inflationary environment and and as we talk about like fiat is like creates like high time preference, right? So I think very short-term like just trying to get something today and so a trade is like short-term I can get like that short-term gratification and maybe you know that that's that's why the fiat system encourages that right when you think about Bitcoin you start thinking about long-term decisions and it starts to change that but again I think it's more about like where we're at right now and kind of to the point that you're making like maybe we shouldn't have laws around this but maybe there should be some education to try to help people see see the other side of it and sort of let them see some of these statistics that you've laid out.
>> Yeah. I I sort of see myself as I'm playing my role in a free market right now. Like calling out the criticism. Yeah. Um
>> like I think it's perfectly valid to say, hey, like this is bad for society. Um you're like we should sort of uh criticize your brand um for for doing something that's hurting our society. Um and that's a very that's a that's a free market mechanism,
>> right? And um uh and so you know you could even argue that hey just let it run its course because this is going to be bad for them long term anyways. Maybe that's true, maybe it's not. But you know you can only sell your users uh you know like extract money from your users for so long before they wisen up. Perhaps I think that's probably what happened with crypto trading is these exchanges sold let Silicon Valley dump tons and tons of useless tokens on their users and now people are kind of over crypto trading. Um if you saw the reactions to the Coinbase ad and the Super Bowl like lots of people were filming themselves watching the commercials and then everyone saw like the Coinbase ad pop up and they're like gh you know. Um, so maybe that's what will end up happening is like a few years from now Robin Hood's brand or Coinbase's brand is going to be even worse because people are like, "Yeah, they pushed they told me to bet on March Madness and I lost all my money and you know, look where that got me."
>> Do you think sports is where you draw the line? Because you kind of keep referencing back to sports when they implemented sports cuz I mean you would also say that I mean most of the financial market is speculative in gambling today as well. So, I mean, do you really draw the line at sports? Because if not, I mean, to your point you made earlier, like bringing futures to retail, retail is not really equipped to trade against Citadel. Um, so that's that's not pro that that's not fair necessarily. It's like a knife to a gunfight kind of a thing. Um, but I mean, we should allow democratization to the financial market. So, where is that line?
Okay, so I got to tell you what I've been doing with my money lately. I moved my cash over to River. And before you ask, yes, I still pay all my bills in dollars. Everything works the same. But here's the real difference. You see, River pays me 3.3% on my cash and they pay it in Bitcoin. So my money that was just sitting there doing nothing at all in the bank, it's now stacking Bitcoin while I sleep. And I started thinking like, my bank takes my deposits, they loan those deposits out, they make 12, 17, 24%, and they pay me 0.04%. I mean, honestly, that's kind of a shakedown when you think about it. Now, River's FDIC insured. They use Full Reserve. They charge no fees. So, I don't know why I didn't do this sooner. Go to river.com and use code mark moss and they'll give you $100 in Bitcoin just for getting started.
>> And then, you know, I don't have a a solid answer, right? Um I don't think that we should make it illegal for people to trade options, right? I think that would be a mistake, too.
>> I think there's like a sort of a gray area zoned where it's like, how much are you gamifying this thing? How much are you pushing it to people who if you had to be honest with yourself really shouldn't be doing this?
>> Um uh um and you know there used to be like a lot more sort of controls like if you wanted to trade options you used to have to submit a form and be like I'm sophisticated here's my net worth and blah blah blah and now it's like
>> hey 19-year-old uh
>> you know, would you like to get rich and trade options? Yeah. Um, so and then I think with sports though I think the clear new line here is there's nothing financially useful about it right before that like option has a value like there's a reason they exist. There's a reason we have a rich options market. It's a it's a very useful financial instrument for the right people. Um, but sports is just like the like crosses a line where this is pure speculative entertainment.
>> Yeah. Um, and I think that's why it is so visceral to people now and it makes it a lot easier to criticize.
>> Yeah. I I saw just this morning I was in the gym and I saw on the on the news TV and Zuckerberg's in court and there's like some big cases I think they lost about um they've they've gamified social media. They've made it too addictive. And I don't know what that means. I mean partly it's addictive because of the dopamine we get from it. Same with gambling. We get we get the dopamine. So we're addicted. We're drug addicts, right? We're addicted to our own own chemicals. Um, but you know, apparently he lost a court case. He's made it too addictive. And I think maybe kind of what you're saying is these platforms could make it not so addictive potentially.
>> Exactly. Exactly. And I think there's something with business. I think people have a um I think most people hold this view of business and a free market. They're like, if it's technically allowed, I should I can do it.
>> Right. Right. And I think that's because people have a deep do not have a deep understanding of how our country or why it actually works, right? Um a a really healthy nation is a group of people who share this bond. They often share like a blood and sacrifice and they feel this like it's very unlikely that why would you do something to harm your people, right? Um, and so there's this usually this social check on, you know, and there's always bad actors like, you know, can't trust everyone to be an angel. So you need some guidelines and some rules, but like the more society gets to be like, oh, the free market is is like the gospel, right?
>> Um, uh, you know, like the system breaks. Yeah. Because like the system's designed like like the blockchain, right? um you only go to the blockchain when you really need to. Like the whole sort of like legal system design, yeah, we have this thing when you really need it, it's there. But like we're kind of trusting everyone to sort of like generally be good,
>> right?
>> If everyone is just always trying to game everything, then this thing just falls apart.
>> And and so I think the more businesses get like this, the worse it becomes for all of us because the system starts to fracture.
>> Yeah.
>> Um, so that's why I think it's, you know, we need to be calling it out.
>> Yeah. So with some of these companies you mentioned like Coinbase um at their Super Bowl ad and people sort of cringing off of that and so some of these platforms were sort of like these crypto casinos as we like to call them where people come in and they trade these meme coins that make it really easy. And maybe some of those companies haven't been doing so good lately and then we've seen this new interesting phenomenon where Kraken an exchange just got like a banking license um which is pretty interesting but they also still sort of run a crypto casino. I mean, do you think that some of these and then and then we see actual banks like JP Morgan bringing Bitcoin in? So, do you think there's like a a big shift where maybe a lot of these big institutions are seeing sort of what you're saying and are trying to sort of transform?
>> Um, yes. I think what we're seeing is the era of the money being in the speculative retail trader trading this infinite stream of new hot altcoins. I think that era is kind of over. Um and so these the companies are realizing we need to get more serious and we need to actually build real financial products.
>> Um and so so for example, you know, you're seeing a lot of institutions like Kraken, like others trying to get bank charters of some sort
>> to legitimize and diversify the services they offer. Kraken, for example, had a big milestone. They they were the first crypto company to get access to the Federal Reserve. Wow. Um, and so that means they can direct they without going through some other bank they can access Federal Reserve payments and wires which is pretty pretty cool. Um, so yeah, I do think there's this general realization and we saw today actually Coinbase launched what I think is actually a great product which is um, uh, Bitcoin uh, mortgages,
>> right? um and you know the ability to get a mortgage for your house without having to sell Bitcoin to pay the down payment um without risk of too much risk of liquidation of the Bitcoin. Um and so I think you're seeing like you know people go okay yeah when you start actually getting do more banking um around this stuff because the speculative stuff actually is kind of like it makes us money today but it's not really like the future.
>> Yeah. Yeah. And I mean uh in 2022 after FDX collapsed, I made a couple YouTube videos saying that uh this is this is the end of crypto. There won't be another crypto bull run. There will be a Bitcoin one, but there won't be another crypto one. Of course, people hated me for that. Oh man, I got so much hate. But but we never saw it. And and the big catalyst for me was that um you had really all these VCs that were pouring hundreds of millions or billions of dollars into crypto, pushing the media, pushing the narrative. They loved getting the pre-sale tokens, dumping them on retail. they loved it. But after FTX, the the SEC clamped down on that. And I said, with all that money coming out and not being able to push the media narrative, it's it's just not going to come back. And so, we never saw that alt season, a lot of the crypto gamblers were hoping for. And I think that probably has a lot to do with it as well. And just, you know, things are maturing and Bitcoin has it started evolving into the banking system. I saw uh you posted that uh River, which by the way, you guys do amazing research by the way. uh check be following River if nothing else just for the research they put out. But he talked about how um if River was a bank, you'd be ranked in the top 15% of banks in the world by deposits, ranking by deposits. U and that's after just seven years. So congratulations by that uh or for that. But what do you think about like the banking services that you're talking about? So if if some of these exchanges want to start becoming banks and banks want to start becoming exchanges, how do you think about that? Like sort of keeping your place in this ecosystem as it's all sort of converging and what are those services that you think are going to be important?
>> Yeah, it's a great question. Um and you know internally we think of ourselves as a bank already. Now legal disclaimer, we are not a chartered bank. Um we partner with a chartered bank to handle fiat stuff, cash deposits, FDIC insured. Um we partner with a bank called Lead Bank and they're a great partner. Um now now but sort of um in terms of the services we offer, we you know that that's kind of what we want people to feel like you know this is banking. And our vision is a we call it the dual money era. Um, and I think that this is what a lot of these crypto exchanges are starting to realize is there's this crypto trading stuff. Still make some money, but really what we're entering is this dual money era with Bitcoin and dollars. And Bitcoin is like your savings, but you don't want to really sell it because selling it incurs a a taxable event. It's, you know, also you're selling it for like a weaker money, right? So people really don't want to sell their Bitcoin, but they still need to transact in dollars, right? They still earn get their paycheck in dollars. They still pay their bills in dollars.
>> So So I what what I think everyone is converging around is that like okay, what's this dual money reality look like in the services we offer? And I think it looks like um you know uh like you know at River you can get your paychecks onto River, you can pay your bills from River, we pay a high yield interest rate on your cash, but we pay the interest in Bitcoin. Um, Coinbase's product, notably, as far as I I could tell, for their new mortgage, it they don't allow any cryptos uh other than Bitcoin to be the collateral. Um, and I think that kind of like says it all,
>> right?
>> I agree.
>> Uh,
>> and and and so, you know, I think I think that's what we're going to keep seeing is like this realization that, okay, Bitcoin is fundamentally different than all this crypto stuff. Bitcoin and dollars are sort of like peas in a pod with like the future of banking. Um, and then the crypto stuff is like casino trading. Um, and we'll still that one's not going to die, but it's like a a distinctly separate thing.
>> Yeah. I mean, Bitcoin is a monetary protocol, right? The other ones are at best tech companies at best, right? So, maybe they belong in a brokerage account somewhere. Uh, but they're not money. They're not money solutions.
>> Yep. And, you know, for River and to answer your your question was, okay, well, how do we stand out in this world if if everyone's starting to see this? I think because we built everything around this vision, right? It all comes down to the the experience. We like we don't have all these other assets distracting the, you know, cluttering the interface. Um, because we focused on this and we typically also serve like a higher end of the market sort of anyone with a good job and up. We call it mass affluent and up. We've we've sort of curated a really high quality client base as well. So the level of service we can offer and the simplicity and elegance of the of the offering is just like very distinct from what Coinbase uh what you would experience at a Coinbase and just like banking, right? All banks kind of offer the same thing. Um, but there's a lot of banks. I think it's going to be like that. Yeah.
>> Um, there's going to be big ones, there's going to be small ones. People find their their their place in the market and and I think that's what we're going to see play out.
>> Yeah. I mean, most people they don't think that way. Most people aren't business owners obviously, but they don't think that way. And it's like there's lots of banks. There's lots of brokerage accounts. There's lots of banks that do brokerage. I mean, most brokerage accounts also offer banking services, right? Like uh and they always think there's like this one winner take all when the reality is it's like it's never really that way because we all have different wants, needs, desires. I mean, I have multiple brokerage accounts for I don't know why, but I do, right? Um, and so I think about it like that. But when I think about banking, I think about like three main services, right? So storage, so security, holding it, and then payments, right? Can I send and receive and then maybe loans, right? It seems to be like the three core banking uh,
>> you know, services that we would need. So I guess you have the storage and and maybe you can talk about because I know you have a cryptographic background and I and I think River has sort of been leading the front on like making sure you have strong security. So you have storage,
>> but then I guess it's the payments piece. Is that like the next big frontier for you to tackle?
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>> Yeah. So, um, the the next piece and and it's actually available in the app today. We just haven't really announced it is the ability to earn your paycheck. You can already get your paycheck sent to River.
>> Um, and you can already pay your bills from River. Um, the bill pay is new. Uh, we haven't launched it yet uh officially, but it's in the app. We just haven't done the marketing announcement. We'll do that in a few weeks. Yeah.
>> Um
>> and and so yes um that's sort of like this sort of next phase is hey you River can basically just like replace your bank account for most needs. Um and lending is something that you know um people ask for. I think there's like definitely opportunity. we're being very thoughtful about how we approach it and how we tackle it because there's lots of different ways to approach approach the problem and understand the need. Um, so uh, so yeah, like I, you know, I definitely see us evolving here.
>> Um, and we're you know, our goal by the end of the year is to be more and more of a primary bank for a larger percentage of our of our clients. But also like the primary use case is they'll sign up and buy Bitcoin. But then it's like, okay, like have you thought about keeping your Bitcoin, keep doing your banking where you keep your Bitcoin? If you trust us to hold your Bitcoin, do you trust us to do your banking?
>> Um, and that's that's our really the next era of River.
>> Yeah. I mean, if if if I can get my paycheck there and then I can hold it in cash and then get above market rate and earn in Bitcoin, that's pretty good. And then I can send my payments out and I can convert what I want into Bitcoin. It work it works pretty well. But let's talk about that part about earning. So, I think you pay 3 and a.5% or something like that. Uh, it's paid out 3.3, right?
>> 3.3 it's paid in Bitcoin yield.
>> Um, at the time of this, as we're recording this, the big fight right now is this Clarity Act. And it seems to be over the fact that banks absolutely no way will they allow, if they can do anything about it, allow stable coins to earn yield,
>> right? That's what the whole fight's over.
>> Yeah. How do you see this uh fight that's happening and taking place? Because like Anyway, frame it up.
>> Well, you know, have you ever seen that meme with like two people fighting and the guy like watching them smoking uh just chilling?
>> Yeah.
>> Um, it's kind of like that. Uh, because um we serve predominantly the US. Americans don't care about stable coins at all.
>> Um
>> we already have a stable coin.
>> So
>> we already have stable coins. We already use the tax like the concept itself is kind of like stupid for Americans. It's like what do you mean? Is it a dollar or not?
>> Yeah.
>> Right. Like I want a dollar. It's like Yeah. Okay. Is it a dollar? I don't care. Like um so really the fight is um there's a few things. It's the stable coin yield thing which is you know so we have so you can't talk about the clear without talking about Tether, right? Tether is the big behemoth, the elephant in the room. They were the first major stable coin and they're the biggest. because they have the network effect and uniquely Tether does not pay any rewards on their stable coin to any partners, any exchanges. They don't pay you interest if you hold it. They keep all of the interest uh and yield on that that stuff for themselves. It's an incredible business.
>> Yeah.
>> And so these other stable coins like USDC and others, they wanted to try to compete with Tether by offering yield and um and uh the banks don't want it. And Tether probably also doesn't want them to be able to earn yield because Tether has the network effect. They don't want anyone else to try and break it by paying out paying out yield. And um and then have to compete with that. Uh, so the banks and tether are kind of the real winner here. Uh, um USDC like is kind of in this weird that's Coinbases and circles stable coin. They're kind of this weird thing where it's like it's like the regulated one, but Americans don't really need stable coins, so it's never going to be that big. So, and then there's the other aspect of the Clarity Act, which is and so honestly, like that whole fight doesn't really matter to me because River, your cash, your dollars are at a bank in a bank um
>> there stable coin involved.
>> Um, so then the other thing is the um uh who regulates crypto that's like the other aspect of this bill and is it um you know all the all these crypto casino exchanges want to get away from the SEC. They don't want they want to be regulated by the CFTC which is a more chill regulator for us. Honestly, clarity here actually isn't good either way because Bitcoin today isn't regulated by the federal government, by any federal regulator. Um, yeah, we have to follow the Bank Secrecy Act and register with Fininsen, but we don't have like a regulator, you know, you know, um,
>> regulating you as an exchange.
>> Regulating us as an exchange. We're regulated um by as a money transmitter by the states.
>> Okay.
>> Um, so we have licenses in all the in the states,
>> but you you could either be a bank that you're regulated federally or you can be a money transmitter and then you have to get state by state. Is that right?
>> Correct. Correct. And being a bank is like a whole thing, right? Um
>> and so so really if the Clarity Act passes, we just haven't we'll get an extra regulator. The CFDC then also becomes a regulator and then it's like okay, you know, so it's honestly it's kind of not the whole thing. Honestly, if it doesn't pass, fine by me. Um, uh, doesn't it help help us at all? Uh, frankly,
>> who does it help?
>> The crypto casinos. Um, like the Coinbases. Um, Coinbase basically uh because now the CFTC is the regulator and they can avoid the SEC. Um,
>> uh, didn't Coinbase withdraw support for the Clarity Act? I thought I saw there was a big
>> Well, that because of the interest part of it. Uh, they want to be able to pay out interest on stable coins and to compete with Tether. But now that provision they're losing to the bank lobby it seems. Um, so honestly if this whole thing falls apart like good.
>> Yeah.
>> Like uh, you know, doesn't imp like it's not it's not like it helps us in any way.
>> Yeah. So who does it help?
>> Well at this point
>> you said Coinbase but Coinbase is
>> it's unclear
>> you know it's like the CFTC thing helps Coinbase but the interest thing doesn't. So, you know,
>> I don't know.
>> Yeah, cuz Coinbase has withdrew support, so obviously they don't want it. So, it doesn't help them too much.
>> Tether, it helps Tether.
>> It helps Tether. I mean,
>> I get I guess it locks the banks in, so they don't have to compete with people having yield on stable coins.
>> Um,
>> the real winner is Tether and the banks. Yeah. And which which kind of ironically, well, you know, Tether's got a lot of influence in uh in DC right now, and so do the banks.
>> Yeah. I mean, the flip side, if we want to think about this from a, you know, whatever game theory sort of framework, is that,
>> you know, I've done a couple videos on this. If stable coins could earn yield, it literally puts the banks out of business because the bank's business is to take deposits and then lend them out in different durations, right? Fractional reserve, right? So, they're going out 5 years, 7 years, 30-year loans. But if my money is portable and I can earn yield, then why would I leave it in a bank earning 0.4 for when I could just move it somewhere else and and the banks can't have deposits just moving around like they need your money to stay there because of the loans that they have this duration. So it it it basically ends the banking model as we know it. I would think that Tether would be more than happy to give up I mean it's a tiny company that has the biggest profit margins in the world. Like give up a couple points and you put the banks out of business, look how much bigger your business would grow. kind of a thing, right? So, and if we play game theory there, but I could see why the banks don't want it. Um, anyway, interesting. What what I don't understand, and I don't I'm sure you don't either, but like it was passed, the president signed it, and now the banks can now block it, right? Wasn't
>> did the president sign it?
>> It wasn't I haven't followed.
>> It wasn't passed. No. Okay.
>> Anyway, all right. So, um, what do you think about the regulations on the space then? So, you're not a fan of the Clarity Act. I know a lot of people want it because they want clarity. Um, you're just you just prefer a lighter hand.
>> Well, to us, here's the thing. It gives clarity for crypto and stable coins. Bitcoin already had clarity. So, it's clarity for who, right? Clarity for crypto. But Bitcoin already had clarity. It's it's not it's not a security. And here's the state regulatory regime. I mean, it's it's annoying, but it's straightforward at this point. Um, so it was a known quantity, so it doesn't give us any more clarity. It just adds one more rule. Uh, yeah. Yeah. I don't like the fact that I don't even like the name of it because it's like, uh, years ago, I was at the Bitcoin conference on the news desk with Kevin Oly, Mr. Wonderful, and they were talking about we need the regulations, we need the clarity, you know, we need the clarity on what we can do. And I said, hang on, hang on. like you're from Canada. Like uh we're from America, we're free. So we don't need laws to tell us what we can do. We're free. We're supposed to be able to do things. The laws tell us what we cannot do. So like we, you know, we're not begging for that. And the very fact that they have to give us a law for clarity, it's like that sort of works opposite of everything that we stand for. I thought
>> there now there is one thing that we are participating in with the clarity conversations. I just remembered it. Um, and and I think they're doing this to try and win over like, you know, maybe maybe the Bitcoin C. There is one thing that's potentially good for Bitcoin, which is a de minimis exemption.
>> Yeah.
>> Um, if if you spend Bitcoin below some threshold, there's just not taxes involved. That would be big and that would that would Okay, that's the kind of clarity that I would love. Um, so if that can be included in the Clarity Act, then okay, fine. I actually think it maybe is overall enacted. Um, that's the one thing, yeah, worth mentioning.
>> Do they say what like a threshold would be? Is it like $600 or something like that?
>> I I would guess it's like 600. Um, I forget. I don't know the latest conversations. I think they're actually in DC chatting about that today.
>> What would your guess, speculative guess uh be? I mean, do you think if they pass the de minimis, you we'd really see medium exchange use cases of Bitcoin pick up?
>> Um, maybe a little bit, but I don't think like I don't think drastically because I think the fundamental issue is one, people don't really still want to spend the Bitcoin. Now, it's less burdensome given there's not a tax taxable event, but still like if you have dollars, I'm probably going to spend my dollars instead of my Bitcoin. Two, um, it's like a friction thing, right? It's just sort of payment networks are sticky. And the example I always use is look at countries with really crappy currencies like Argentina, right? Um, even when it's a super crappy currency and people don't want to save in it. They're still spending in it like because it's it's so sticky. You have to pay your taxes in it. You got to like swipe your card. It just all works. And so everyone's saving in dollars down there, but they're still spending in pesos.
>> Yeah. Yeah. I mean, the medium of exchange and the store of value can can be different for sure. Um, I think one thing I think a lot about though is I mean, you look at the growth of the lightning network which you guys rivers research has has talked a lot about and we can see that that is growing rapidly. And then one thing that I've been spending a lot of time thinking about in 2024 I gave the closing keynote over at Bitcoin Mina and I said that I predicted that Bitcoin would reach the medium of exchange phase between 2030 and 2040 and it would be driven by agent agents using it.
>> later.
>> That was in 2024. Now, we've seen all kinds of reports talking about how AI agents are using Bitcoin over the Lightning Network, using the 404 protocol, and you know, the the need for micropayments is going to pick up. So, but it's going to be really hard to have your agents running around and spending Bitcoin if you have to calculate what all those taxes would be.
>> Yes. Yes. So, that might that might be a big unlock. I think the whole machines are machine uh economy thing is like we're very early and let's see what happens. Um, uh, it's it will be exciting to see like if these things start becoming sort of autonomous economic actors uh that you know need to receive and and and send money. Um, I think like you said, like your timeline seems a lot more realistic. Uh, like we're still probably a bit of ways from that. Uh,
>> well, McKenzie reported by 2030, so in four years from now, McKenzie reports that over $5 trillion dollars of agent-to-agent commerce will happen in the next four years.
>> Um,
>> it's a big number.
>> Interesting. Yeah. I don't know.
>> I don't know how much I trust McKenzie.
>> Yeah. I mean, whatever. Um,
>> Um, maybe I I don't know. I I think I I feel like um I don't have a good I I feel like I don't have a good uh I don't trust my own predictions about AI.
>> So, are you a little bit more on the bearish side? Like maybe it's a big waste of time and not going to be as transformative as most people think or maybe not in the time period most people think.
>> I think I hold two competing thoughts in my head.
>> Okay.
>> And and you know, one is this thing is utterly transformative. Um, which is totally true for some things. This thing, this thing is totally
transformed. No, no denying it. Um, I use it all the time. We use it a lot internally. Um, but on the other hand, it's like I feel like sometimes we're we're like keep running into like actually like our own understanding of intelligence maybe isn't that correct. And these things get more capable but not more intelligent. Um uh or or maybe that's just like you know so but it still feels like there's some few there's some fundamental breakthroughs that still have to happen for these things to actually kind of truly be intelligent agentic actors and it's just really hard to reason about what that trajectory looks like.
For for me I think there's a couple things. I think in regards to what you're saying though I don't I just don't believe that there will ever be a case where you know they take over the singularity whatever uh humans are creators. We We have creativity. Machines don't. Machines are programmed. And I think maybe that's part of the part that you're saying. And so if we if we think about these agentic autonomous agentic actors that could go out and do all these things for me, but humans are irrational. I'm not even sure I know what I want. The machine certainly doesn't know what I want. Right? And so it's like at the end of the day, and as I'm sure you're seeing when you play with it, most of the times what it brings you back isn't actually what you want. And you have to work with it and stuff like that. So to imagine this world where it could like read your mind for you and then go take all those actions for you. Uh it seems pretty far-fetched. So I don't know if I necessarily agree with that um part of it. Um I don't know if that's what you mean by thinking about what intelligence actually is.
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Yeah. And like, okay, you know, so to get to this world that Mckenzie's predicting, right, where these things are engaging in commerce presumably with each other, like I could see, okay, you have this thing automatically buy things for you or something. Um, but if they're actually transacting with each other, um, which I don't know if that's what Mackenzie is predicting, but >> yeah, agent to agent commerce. Yes. >> Okay. Okay. So, agent to agent like um how do you get there without these things having judgment and um sense um what is it buying from the other agent? Like why is there an agent on the other side? What what's it buying from it? Um why is it buying it from an agent and not just an online store that tells me what it is? Um is it buying some service from an agent that my agent can't do? All of these things are just a little unclear.
Yeah. Well, I think it would be um yeah, services that your agent couldn't do, right? So, for example, um my agent is going to go build me a new online business or whatever. So, it's going to go do all the research, find the top performing online businesses, but then it needs someone to do the copy, someone to write the funnel, someone to run the ads, someone to do the things. And my agent, I haven't developed the skills for my agent to do that. So, it can go tap into agents who are more skilled in running ads, for example. And how much would it pay that agent? I guess either whatever the market will bear at least cover the cost of the inference, you know, the the energy, the compute, etc. Um maybe I guess that's what it pay other agents for. I also think like um you know the way the internet is built today is built off of humans obviously, right? So like with Amazon for example, um it's not just the our purchasing that Amazon wants. They want our data. So they want to see what other things I look at when I'm there. So, Amazon, for example, has blocked agentic traffic for the most part >> because agents don't give them the data they need. >> And if you think about like if if I wanted my agent to book me travel to Europe or whatever, right, it's going to need to look at airline flights. It's going to need to look at weather reports, right? There's going to go to weather.com. But weathers.com entire model is built off of ads. >> Yeah. >> So, how is weather.com going to pay to run that website if a human's not going to go see the ads, right? So then well you're going to have to pay for the API call >> and how much is the API call probably about the cost of an impression. What an impression would earn like a fraction of a penny or something right? >> So then the agents just to go around and do this work will have to make you know fraction of penny transactions for API calls. How many times is it going to check the weather you know 10 times 15 times? How many times will it check plane flights etc. Right? So the entire internet will be built different for sure. If you think about all websites are built with, you know, copy and psychology for humans, but as you said, like they don't feel, they don't reason. So, you're not going to build a traditional website for a human anymore. Um, so I don't know. I think that's some ways it'll change, but yeah, I guess we don't really know. Um, but it does seem in in my case, like I said, that's why I said I think it's going to push to medium exchange. It's coming. It's here. I use it. Uh, you you use it as well. Um, it's happening really really fast. And um I think it's going to push Bitcoin's adoption. Uh I think I told you I'm debating Peter Schiff uh later today. And that's one of the one of the my secret weapons I have I'm going to pull out. You know, hey, gold gold was the past, but how is it going to work in the future?
>> Yeah. It's a great I think that's a great um great curveball to throw at him. >> Yeah. Yeah. So, what what what do you think um how long do you think fiat survives? I mean, do you think it it survives forever? Do you think in your lifetime you'll see a full transition, maybe the next 50 years or something?
>> I mean, my observation, it survives longer than you think it would like if you look at a like a given fiat currency, right? Like I always go back to Argentinian peso. like talk you know it's obviously stronger these days because of Malay but you know historically extremely mismanaged economy extremely mismanaged currency um with you know hundreds of percent per year inflation um and yet it's still there >> right um uh and so now is the dollar distinctly different because it's the world reserve currency like if the dollar starts to do that is the is like it's just totally different ball game maybe. Um, you know I think I think I think fiat currency lasts quite a while longer. >> Yeah. >> Uh I don't know how long but it's going to be quite a while if I had to guess. I I think back that when the dollar took over from the pound sterling it was about a 30 to 40 year process for that to happen but even today the pound sterling is still like the third most used currency in the world 100 years later. >> Network effects are really sticky.
All right. Um, I want to ask you a couple quick questions and then we'll uh close this thing out. Let's see. Um, do you think we're still early in Bitcoin? And at what point would we not be early in Bitcoin anymore? I think the answer is yes, because like we discussed, we're still got a ways to go before it's any real medium of exchange, right? Um, and I think, you know, if the future plays out as we think and we eventually enter that era, that will feel like, okay, we're now sort of middle-aged. Um, like, okay, this thing is just starting to really widely be used for transacting. Um, and so until then, I think like I think it's pretty safe to say we're early. >> Okay. Until it's a widely used as a mean of exchange. >> Yes.
>> All right. um in in the early 90s or in the late in the late 90s I started >> buying these crazy things called internet stocks and then uh through the early 2000s I built some internet companies. Um and today there's no such thing as an internet company. Every company is just on the internet. >> Yes. >> At what point what do you think by 2030 or 2035 we don't have Bitcoin companies anymore? They're just companies.
>> Yeah, I I do. Um I I mean I think to some degree, right? like you say they're still gold companies. The internet is just such a such a broad concept that um uh it just doesn't make sense anymore, right? But um with with Bitcoin, I mean, if Bitcoin truly becomes a medium of exchange, then it's just like money, >> right? >> And you know, maybe there's a few people that specialize at custodying it and that's like a Bitcoin company, but like every company just touches Bitcoin to some degree. Um, but yeah, you wouldn't call a store a money company. Uh, so yeah, I I I think it's just gonna get blurry. I don't think >> you think that's by 2035. >> Yeah, I mean, I think that that feels about right where like that line starts to just really blur. Yeah. Like it's just normal now. I mean, you could argue it's already kind of started right with with the Bitcoin ETFs. >> Um, is Black Rockck a Bitcoin company? um is Charles Schwab, a Bitcoin company, because they offer, you know, um it's just kind of starting to get pervasive and everywhere. Um, so I think we're actually already starting to see like the the lines getting blurred. Yeah. >> And the Bitcoin companies will look start to look more like banks. Um, so I think we're kind of seeing a convergence from both sides. The banks will add more Bitcoin stuff and the Bitcoin companies will add more traditional stuff, >> which makes sense as Bitcoin just becomes more money.
What would you say the biggest misconception about Bitcoin is by the general population? >> I think at this point um the biggest misconception is very much just it's crypto. Um I think like we've come a long way. I think people do it is more generally known now that Bitcoin is its own is is sort of distinct from from crypto but I still think that's the general conception because the Silicon Valley marketing was so strong during like the crypto years um that we're still in a bit of a hangover where it's just lumped into all that stuff.
Then what's the biggest misconception about Bitcoin among bit Bitcoiners? Um I honestly I think the biggest misconception I see is this cognitive dissonance I think the hardcore Bitcoiners have which is Bitcoin is this sort of tech freedom technology that is you know um super self- sovereign um but all these normal people are holding Bitcoin in these custodial institutions and um you know that doesn't align with my ethos and I think there's like this cognitive dissonance like what's going on. And I think it's like actually, hey, the world's going to have all of this. >> Yeah. >> Right. Um, you know, we live in a civilization where there's institutional trust. Bitcoin will be everywhere from the, you know, institutions you hate to the hardcore, you know, freedom lovers that you love, you know, and and so it's not like any it's not this thing that you can just sort of dictate like how how to use it anymore. Just like you can't do that with gold. Um, if someone makes ugly jewelry you don't like, you don't go, "Hey, that's not how you use gold." Yeah. Right. >> Yeah. >> Yeah. I think that I think that's so fitting. Um, you know, to hear like early OG cipher punk people saying Bitcoin's lost the ethos, I'm out. And it's like if you believed it was going to take over the world, then it was always going to come for every institution out there. Um, so that's that's a good point.
All right. Uh, let's wrap it up with that. Um, again, Alex, uh, River, um, I've been using River for years and and really what drew me to it was exactly what you said. It's so easy to use. The interface is so good and you call people. You get you get you get English speaking Americans on the phone. It's amazing. Um, where do you want to point people? Anything anything you want to point people to check out or follow or or look at?
>> Um, we're easy to find. We're at River on Twitter and river.com on on the internet. Um, and if you ever have any questions, you can reach out to me directly on Twitter. Leechman is my last name. And we'd be happy to. We're always It's always a pleasure to serve new clients. >> Yeah. Great. All right. We'll link to all that down in the show notes down below if you want to go check it out. I've been using them for years. I think it's a great great platform. And with that, we'll sign it off. Thanks, Alex. Thanks, Mark.